UPS Cutting Back Spousal Health Coverage Over Obamacare

Image: UPS Cutting Back Spousal Health Coverage Over Obamacare

Wednesday, 21 Aug 2013 06:14 PM

By John Morgan

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UPS and a growing list of other big companies will end health insurance coverage of employees' spouses this fall if they can get coverage elsewhere, an unwelcome result, at least in part, of Obamacare.

Increased medical costs, "combined with the costs associated with the Affordable Care Act (ACA), have made it increasingly difficult to continue providing the same level of healthcare benefits to our employees at an affordable cost," UPS said in a memo to employees.

A survey by consultant Towers Watson found that in 2013, 4 percent of large employers excluded spouses who also had coverage at their own workplace, and 8 percent planned to implement the restriction next year, Kaiser Health News and USA Today reported.

"When healthcare reform came on the scene a few years ago we definitely saw an uptick in companies wanting to explore a working-spouse provision," Steve Noury, national sales director for HMS Employer Solutions, told Kaiser. "We have seen [them] over the past two or three years putting those in place."

While Obamacare requires large employers to cover employees and dependent children, it does not require them to cover spouses or domestic partners.

The move by UPS will affect an estimated 15,000 working spouses at that company, which UPS estimated would save about $60 million annually.

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Kaiser Health News and USA Today said UPS spouses may have difficulty finding similar coverage in their own workplaces because the UPS plan is more generous than the national average.

The UPS memo, obtained by Kaiser, attributed at least part of its decision to the healthcare act's research fee and a temporary fee per member. Other factors cited in the memo included the law's ban on annual and lifetime coverage limits and its requirement to cover dependent children up to age 26, Kaiser reported.

Executives at several staffing firms told Reuters that Obamacare, which requires employers with 50 or more full-time workers to provide healthcare coverage or incur penalties, was often cited in requests by their corporate customers for part-time workers. And the decision to delay the mandate until 2015 has made little difference in hiring decisions.

"[We] and other people are hiring part-time because we don't know what the costs are going to be to hire full-time," said Steven Raz, founder of Cornerstone Search Group, an employment firm in Parsippany, N.J. "We are being cautious."

Three out of four of the nearly 1 million job hires in the United States this year have been part-time and many of the positions are low wage, Reuters reported.

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